Australians need better risk information as natural disasters intensify

Governments should make flood studies readily accessible and provide more resources to help Australians understand disaster risks, according to new research by the Committee for Economic Development of Australia (CEDA). 

In the dark: Australians need to know their disaster risk, shows three-quarters of Australian homeowners believe they understand the risks to their property, but only half of those who have experienced weather damage say the same. 

“The National Climate Risk Assessment released this week is a stark warning that the effects of a changing climate will be many and profound,” CEDA Senior Economist Liam Dillon said.  

“While the assessment takes a national perspective, the impacts will be felt most acutely at the local level – affecting communities, businesses and households. 

"Our analysis of the latest HILDA survey data shows Australians may be underestimating the risks they face from natural disasters and reveals a troubling gap between perceived and actual disaster preparedness.” 

The analysis reveals around 75 per cent of homeowners believe their homes face low or no risk from fire, flood or storm damage. Less than five per cent see a high risk from storms, while less than one per cent believe they face a high flood risk. 

Yet approximately 4.4 per cent of or 675,000 Australian homes have at least a one-to-five per cent annual probability of flooding, according to evidence from the recent federal parliamentary inquiry into insurers' flood responses. These numbers are only expected to grow. 

People’s understanding of risk determines the steps they take to protect themselves from it. One such step is buying insurance. 

"While 96 per cent of homeowners have basic home or building insurance, only 59 per cent have flood cover and just 41 per cent believe their policy would fully rebuild their home and replace contents if disaster struck,” Mr Dillon said. 

"This is particularly concerning given extreme rainfall events have increased in intensity by up to 10 per cent in some regions, and severe floods and storms have resulted in $18.9 billion in insured losses over the past decade." 

"One troubling interpretation is that people may not fully understand the risks to their property until it's too late," Mr Dillon said. 

"Research shows that without first-hand experience of hazards, people tend to overestimate how well they understand potential dangers." 

The personal and economic costs of these extreme weather events are significant, with estimates that 10,000 homes and businesses were damaged or destroyed in this year’s floods on the NSW Mid North Coast alone.  

The lack of accessible risk information compounds the problem. The parliamentary inquiry found flood risk data is held by many parties across a complex ecosystem. Households and small businesses have the least access to this information. 

"A survey found 72 per cent of households couldn't access their council's flood risk information online or were unsure about it," Mr Dillon said. 

"Even when studies are available, they're technical assessments that are difficult to understand without support." 

The challenge is set to intensify. In NSW, average annual disaster relief and recovery spending has increased tenfold, from $154 million in 2013-18 to $1.6 billion since 2019. 

To address these challenges, CEDA recommends: 

• Governments at all levels should make flood studies readily accessible and provide resources to help residents understand them, with additional support for disadvantaged and vulnerable residents;
• Funding support for councils, particularly in regional and remote areas, to develop comprehensive risk assessments;
• State and territory governments should consider strengthening mandatory natural hazard disclosure requirements for property purchases to explicitly include natural hazards like flood; and 
• Governments should closely watch how the costs of insurance policies evolve and influence take-up, particularly for lower-income groups.

“As the risk assessment warns, the years ahead will bring more intense and more extreme weather events, including in areas where they haven’t been seen before,” Mr Dillon said. 

"Against this backdrop, Australians need a full understanding of the disaster risks in their homes.” 

CEDA Senior Economist Liam Dillon is available for further comment and interviews.

Media contact:
Justine Parker, Media Manager and Content Specialist 
Mobile: 0436 379 688 | Email: justine.parker@ceda.com.au